The short-term road will be rocky but the future should be bright – we must all stick together to promote this message
Welcome to the new dawn. Independence Day came and went and, well, here we are. There will be a lot of speculation around the result but, as with any change and uncertainty, it is about keeping calm heads.
Although there is concern as we enter uncharted waters, life, business and mortgages continue. All we can do as trusted brokers is continue to advise and reassure our clients, remaining professional at all times.
Many of us in the industry started businesses or survived in far more perilous conditions, and we have faith there will be opportunities to thrive.
Eyes will be focused on the Bank of England and its reaction where interest rates are concerned. In the short term there could be a base rate cut, meaning mortgage products should retain their current low rates, and there will be much for borrowers to take advantage of.
That said, it is important for buyers to remember why they are purchasing a property. In most cases it should not be deemed a short-term investment.
It is too early to speculate about house prices and, while they may ease slightly, the underlying fundamentals of people needing a home and the current lack of supply remain. If sterling continues to weaken, however, foreign investors may seek to take advantage of this market again.
In the lending market, banks are much better capitalised and, having repaired their balance sheets in recent years, will still be looking to lend. For the most part, there is no reason to think it will not be business as usual. The BoE has also made clear it will do whatever it takes to assist where necessary.
Much will depend on the new leadership steadying a divided country and, while the short-term road will be rocky, there is no reason to believe the future will not be bright. We must stick together to promote this message.
In the markets, three-month Libor is at 0.59 per cent while swap rates the day before the vote spiked heavily on the gamble that ‘Remain’ would win.
2-year money is up 0.11%at 0.81%
3-year money is up 0.14%at 0.88%
5-year money is up 0.19%at 1.03 %
10-year money is up 0.10%at 1.31%
Pre-vote, then, what had happened to products and criteria? Following its ad campaign for brokers, Virgin Money is the latest lender to announce it will roll out product switching for brokers with proc fees from July. Music to our hardworking ears.
Nationwide has opened up its new age criteria and will allow remortgage customers up to the age of 85 through brokers. This will commence from mid-July and sets a new standard for mainstream lenders. The limit is still £150,000 for new borrowing at 60 per cent LTV but it is a start.
Talking of age criteria, Saffron BS has removed its maximum altogether and all cases for those aged over 75 will be individually assessed. It will also allow interest-only downsizing for self-employed, contractor and professional mortgage products, as well as lending up to £1m at 90 per cent LTV for first-time buyers within the M25. Strong changes indeed.
Well done to HSBC for its extraordinary 0.99 per cent two-year fix, which I believe is the first fixed rate to break the 1 per cent barrier. The product has a £1,499 fee and is available for purchases and remortgages up to 65 per cent LTV. Who will follow suit?
Elsewhere, Santander has a new and improved affordability calculator, while Halifax has withdrawn its 1 per cent cashback products and now first-time buyer products have £500 cashback. Rates have been reduced by 0.3 per cent on two-year fixes and by 0.1 per cent on five years.
Clydesdale Bank has new reduced rates, with two-year fixes with a fee at 60 per cent LTV from 1.89 per cent. Its large-loan product for loans over £1m up to 75 per cent LTV is now 2.29 per cent. Five-year fixes with a standard fee up to 75 per cent LTV are now from 2.59 per cent.
Kensington has launched its Premier Lending Offering. It will lend up to £2m to 75 per cent LTV and allow interest-only with a plausible strategy including downsizing. It will also look at 100 per cent of bonus and commission payments, and 50 per cent of vesting shares. Contractors are based on day rate times 46 weeks and self-employed income based on the most recent year.
Andrew Montlake is director at Coreco